20040601Responses of Avista to Potlatch.pdf

Avista Corp.
1411 East Mission PO Box3727
Spokane, Washington 99220-3727
Telephone [phone]
Toll Free 800-727-9170
. RECEIVED
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Corp.
2064 JUN- I A(110= it
May 28, 2004 tiJ FiUBLtC
UTILiTiES COHt1tSSION
Conley E. Ward
GNENS PURSLEY LLP
601 W. Bannock Street
PO Box 2720
Boise, ill 83701-2720
Re:Production Request of Potlatch Corporation
in Case Nos. A VU-04-01 and A VU-04-
Mr. Ward
I have attached one copy of Avista s response to Potlatch Data Request No.(s) 21 , 23 , 26
, 45(C), and 51.
If you have any questions, please call me at [phone] or Don Falkner at (509) 495-
4326.
')erelY'
Mike Fink
Rate Analyst
Enclosures
Cc:S. Woodbury
D. Peseau
A. Yankel
(IPUC)
(Utility Resources, Inc.
(Yankel & Assoc, Inc.
VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.
Idaho
AVU-O4-01/ AVU-O4-
Potlatch
Data Request
DATE PREPARED:
WITNESS:
RESPONDER:
DEP ARTNlENT:
TELEPHONE:
OS/28/2004
Don Falkner
Don Falkner
Rates
[phone]
REQUEST:
Please refer to Mr. Morris s testimony at page 16, lines 18-21. Is Avista proposing in this filing
a rate increase associated with the AMR to be adopted in a subsequent filing? Please explain the
general purpose of the accounting proposal regarding AMR in this context.
RESPONSE:
No rate increase is being proposed in this filing. Please see below the reprinted section taken
from my direct testimony.
VI. ADVANCED NlETER READING PROJECT ACCOUNTING PROPOSALQ. As previously testified by Mr. Holmes, Avista is introducing a proposal for
implementation of Advanced Meter Reading ("AMR") for its Idaho customers. Does the
Company have a proposal for how to account for this project?A. Yes it does. As was noted by Mr. Holmes, the Company proposes to install AMR
devices on all Idaho electric and natural gas meters over a four-year period commencing January
2005. The project will involve the installation of additional electronics for existing meters as
well as other communication infrastructure, and finally computer hardware and software
investment.
Due to the multi-year nature of this project, as well as the Company s desire to be able to
measure and analyze both the costs and benefits of the entire project, we propose to treat AMR
investment costs as a unique construction project. All capital investment would follow our
standard capitalization policy and be capitalized to construction work in progress, FERC account
107, until the entire AMR project becomes operational, or used and useful. At that point, the
project will be unitized into the appropriate FERC plant accounts, depreciation would begin and
the investment would receive rate base treatment in regulatory filings.Q. Why are you making this an accounting proposal in this filing?A. There are some segments of the capital investment included in this project
specifically electronic upgrades to existing meters, and/or new meters, that an argument can be
made for immediate inclusion in plant-in-service. That would mean earlier inclusion in rate base
and initiation of depreciation. However, the actual AMR project would not be "completely
used and useful, at least as the whole project is defined, until some 4 years or so after the project
initially begins. Keeping the capital costs bundled, as a single construction work in progress
item, will facilitate easier tracking and analysis of all the aspects of the Idaho AMR program.
Any slight differences in "vintaged" depreciable lives and asset balances between immediate
inclusion into plant-in-service and this proposal should not be material. The Company requests
approval from the Commission to account for the AMR project as described above.
. A VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.
Idaho
A VU-O4-01/ A VU-O4-
Potlatch
Data Request
DATE PREPARED:
WITNES S
RESPONDER:
DEP ARTNlENT:
TELEPHONE:
OS/28/2004
Don Falkner
Don Falkner
Rates
[phone]
REQUEST:
Again please refer to Mr. Morris s testimony at page 17, lines 13-17. Does the proposed
inclusion of transmission capital costs in rate base amount to a request to include $9 million of
CWIP in rate base? Please explain why or why not.
RESPONSE:
No. The proposed inclusion of transmission capital costs in the company s filing does not
amount to a request to include construction work in progress in rate base. The projects included
in the Company s filing were scheduled to be used and useful plant prior to the conclusion of the
Idaho rate setting process. In fact, two of the projects, Pine Creek 203 kV Substation and the
Beacon-Rathdrum 203 kV line, have been completed and transferred to plant-in-service. Based
on updated information, the completion of the third project, the Beacon-Bell #4 230 kV line has
been deferred beyond its original scheduled completion date, and will ultimately be removed
from this filing
VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQ UES TER:
TYPE:
REQUEST NO.
Idaho
AVU-O4-01/ AVU-O4-
Potlatch
Data Request
DATE PREPARED:
WITNESS:
RESPONDER:
D EP AR TNlENT:
TELEPHONE:
OS/28/2004
Don Falkner
Don Falkner
Rates
[phone]
REQUEST:
Please refer to Mr. Morris s testimony at page 20, lines 9-10. Does the request at this point to
include CS2 in rate base amount to a request to include CWIP in rate base? Please explain.
RESPONSE:
No. The inclusion of CS2 in the company s filing does not amount to a request to include
construction work in progress in rate base. The plant has been completed and transferred to
plant-in-service. Additionally, the CS2 plant is included in the Company s power supply model
as a generation resource to be dispatched as load and market conditions dictate.
VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.
Idaho
AVU-O4-01/ AVU-O4-
Potlatch
Data Request
DATE PREP ARED:
WITNESS:
RESPONDER:
DEP ARTNlENT:
TELEPHONE:
5/25/2004
Lafferty
Lafferty
Energy Resources
[phone]
REQUEST:
Please provide copies Avista Uitilities' and Avista Energy s monthly and cumulative hedging
settlement reports for each of the Deal A and B hedging transactions (month-end mark-to-market
for each of the 4 hedges) from April 2001 to the present. Provide all monthly detail necessary to
replicate the calculations.
RESPONSE:
On June 20, 2002 A vista Utilities converted the two financial swap transactions which had
A vista Energy as the counterparty, referred to as Deal B , along with the original physical
purchase at Malin Monthly Index, which was related to Deal B, to one combined physical
purchase at an equivalent fixed price. The conversion transaction saved A vista Utilities the
value of a monthly delayed cash payment on the financial swaps from the 6th working day of the
current month to the 25th of the month following delivery of the gas, or approximately 40 days.
There was no benefit to A vista Energy from this conversion. This conversion also eliminated the
monthly settlement as would normally occur with a financial swap transaction.
The monthly settlement information for the two financial swap transactions comprising Deal A
are being provided with Avista s data response to Potlatch, Data Request No. 45(C). The
materials provided contain TRADE SECRET or CONFIDENTIAL information and are
separately filed under IDAPA 31.01.01 , Rule 067 , and Section 9-340D , Idaho Code.
VISTA CORPORATION
RESPONSE TO REQUEST FOR INFORMATION
JURISDICTION:
CASE NO:
REQUESTER:
TYPE:
REQUEST NO.
Idaho
AVU-O4-01/ AVU-O4-
Potlatch
Data Request
D ATE PREP ARED:
WITNESS:
RES PONDER:
D EP AR TNIENT :
TELEPHO NE:
OS/28/2004
Don Falkner
Don Falkner
Rates
[phone]
REQUEST:
Please provide copies of the monthly reports on the "Commission Basis" referenced by Mr.
Falkner at page 5 of his testimony.
RESPONSE:
The Commission Basis reports are only prepared annually and are basically interim versions of
the Company s revenue requirement filing in this case; similar adjustments and presentation to
the workpapers and exhibits provided in this case. The Company reserves the right in a rate
proceeding, or any other Commission filing, to submit adjustments that may be different from
those utilized in the reports.
Below is a table presenting the Idaho electric normalized rate of return calculated for each of the
years noted in my testimony. An additional calculation was made for the 2001 report to show
the impact of the inclusion of the new pro forma adjustments recently approved in our
Washington jurisdiction, and ultimately included in our current Idaho filing.
ROR Adi. ROR
1998 63%
1999 85%
2000 57%
2001 10.60%69%
2002 16%
CO NFID E NTIAL
ATTACHMENTS
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